BP's Browne strikes black gold with £8m pay package

The chief executive of BP, Lord Browne of Madingley, saw his pay package rise by 39 per cent last year to just under £8m, as soaring oil prices delivered record profits for the company.

The chief executive of BP, Lord Browne of Madingley, saw his pay package rise by 39 per cent last year to just under £8m, as soaring oil prices delivered record profits for the company.

BP's annual report and accounts, released yesterday, reveal that Lord Browne's basic pay, annual bonus and benefits increased from £3.27m in 2003 to £3.74m. In addition, he received £1.9m worth of performance shares and was awarded stock options which are now exerciseable and are showing a profit of £2.1m, taking his total pay package to £7,839,000. In 2003, he earned £5,624,000 on the same basis.

Lord Browne's pension pot also rose by £1.3m over the 12-month period, taking it to £15.2m - enough to buy a £944,000-a-year retirement income. The BP chief executive is due to retire in three years when he reaches 60, but there has been speculation he may be asked to stay on longer.

BP's record profits last year of $16.2bn meant the company met most of its financial targets, triggering a maximum annual bonus of £2.3m for Lord Browne equal to 165 per cent of his base salary. He also received a provisional award of up to 1.3 million performance shares which will vest early next year, depending on how well the company does.

A BP spokesman pointed out that shareholders had also benefited from the rising oil price and record profits, with a 28 per cent increase in the final dividend and an indication that the company could return a further $28bn to investors over the next two years if oil prices stayed at their current levels.

Amicus, one of the trade unions representing oil workers, contrasted Lord Browne's £8m pay package with the £20,000 that a drilling contractor working offshore could expect to earn in a year. "Oil operators need to share their bumper profits with all their employees, not just those in the boardroom," said Graham Tran, the union's national officer for the offshore industry. "Ordinary company workers have helped deliver these profits and they deserve to see some of the rewards in their pay and pensions."

The average cost of employing each of BP's 102,900 staff, including wages, pension benefits and social security was $93,600 last year - a 16 per cent increase on the $80,500 cost the previous year. BP's main UK pension scheme had a $2bn surplus at the end of the year but there was an overall pension deficit of $5.8bn across the company as a whole.